Last February I opened my mailbox expecting the usual junk and found three different 1099 forms from Kalshi. My first thought was that something had gone wrong. My second thought was that I should have paid more attention during tax season prep instead of rolling positions on Fed rate decisions. After spending way too long on the phone with my CPA (who had never heard of a CFTC-regulated prediction market), I finally figured out how all these forms fit together. Here's what I learned so you don't have to burn billable hours like I did.
If you traded on Kalshi in 2024, you might receive up to three different 1099 forms depending on your activity. This isn't a mistake or an accounting error. Each form covers a different type of income, and the IRS wants them separated.
As a CFTC-regulated exchange, Kalshi has actual reporting obligations. This is different from offshore platforms where you're basically on your own for tax documentation. The regulation adds friction, but it also means you get legitimate paperwork that your accountant can work with.
The three forms you might see are:
Not everyone gets all three. It depends on your trading activity, whether you participated in promotions, and whether you kept uninvested cash in your account.
The 1099-B is the big one for active traders. This form reports the proceeds from your contract settlements. When you buy a Yes contract at 40 cents and it settles at $1.00, or when you sell a position before settlement, those transactions show up here.
Your 1099-B includes:
The reporting threshold is technically any amount, but Kalshi aggregates your transactions by market type. If you traded KXFEDDECISION contracts 47 times throughout the year, you won't see 47 separate line items. They'll be grouped in a way that's supposed to make filing easier.
Kalshi uses first-in, first-out (FIFO) for cost basis by default. If you bought 100 contracts at 30 cents and another 100 at 50 cents, then sold 100, your cost basis is calculated using that first batch at 30 cents. This matters because it affects your realized gain or loss.
I learned this the hard way on a CPI market where I had been averaging into a position for weeks. The FIFO calculation didn't match my mental math, and I spent an hour reconciling before I remembered how the accounting actually works.
If you received referral bonuses, promotional credits, or any other non-trading income from Kalshi, you'll get a 1099-MISC. The threshold here is $600. Below that, you might not receive the form, but technically you're still supposed to report the income.
Common items that trigger a 1099-MISC:
This income is taxed as ordinary income, not capital gains. It goes on Schedule 1 of your 1040, not Schedule D. Your CPA will know where to put it, but if you're doing your own taxes, don't mix it with your trading gains.
Kalshi holds your deposited funds in accounts that can generate interest. If you earned more than $10 in interest during the tax year, you'll receive a 1099-INT.
Most active traders don't keep large uninvested balances sitting around (money not in contracts isn't working for you), so this form is typically small or nonexistent. But if you deposited a chunk of capital in January and waited for the right setups, you might have earned enough interest to trigger the form.
Interest income is ordinary income. It gets added to your wages, prediction market bonuses, and everything else that isn't capital gains.
Here's where I see traders get confused. Your Kalshi 1099-B, 1099-MISC, and 1099-INT tax forms explained for traders means nothing if you don't know where the numbers go on your actual return.
Prediction market contracts on Kalshi are currently treated as short-term capital gains or losses, regardless of how long you held them. This means they're taxed at your ordinary income rate, not the preferential long-term capital gains rate.
Report these on:
The "short-term" part stings if you're profitable. But losses are also fully deductible against other capital gains, with up to $3,000 per year deductible against ordinary income if you have net losses.
Both 1099-MISC income and 1099-INT income are ordinary income. They go on different lines of your return, but they're taxed the same way. Your tax software will walk you through entering each form.
After talking with other traders in the Telegram channel I run, I've seen the same errors come up repeatedly:
If your numbers don't match between your Kalshi account history and your 1099 forms, reach out to their support before filing. Amended returns are annoying.
Kalshi typically sends 1099 forms by mid-February, in line with IRS deadlines. You'll receive them electronically through your account dashboard and potentially by mail if you opted for paper delivery. If you don't see your forms by late February, check your spam folder and then contact support. The forms cover all activity from January 1 through December 31 of the previous tax year.
You still need to report your losses even if you ended the year negative. The good news is that capital losses offset capital gains from other investments. If your losses exceed your gains, you can deduct up to $3,000 against ordinary income per year. Remaining losses carry forward to future years. Losing money is never fun, but at least you get some tax benefit.
Currently, Kalshi contracts are treated as short-term capital gains regardless of holding period. This differs from stocks, where positions held over one year qualify for lower long-term capital gains rates. The tax treatment of prediction markets is still evolving, so consult a tax professional for your specific situation. The IRS hasn't issued definitive guidance on all prediction market scenarios.
If your gross proceeds were below reporting thresholds, you might not receive a 1099-B, but you're still obligated to report the income. Download your transaction history from your Kalshi account and calculate your gains manually. The IRS expects you to report all taxable income whether or not you receive a form. When in doubt, report it. Getting audited over a few hundred dollars is not worth the stress.
Not financial advice. I trade my own money and you can lose yours. Do your own research.